Opel has secured the short-term future of three of its German car plants after parent firm General Motors reached a landmark labour agreement with workers.
Production of midsize Saab models will transfer from Sweden to Germany in 2008 in return for workers agreeing major concessions on pay and productivity.
Workers at Bochum, Ruesselsheim and Kaiserslautern will forfeit part of future payrises for job guarantees.
GM has struggled with rising losses at Opel and its other European businesses.
Trade-off
It is taking radical action to try and reverse its poor European performance, cutting 12,000 jobs at Opel in Germany, Saab in Sweden and Vauxhall in the United Kingdom.
GM hopes its European restructuring, announced last year, will yield 500m euros in annual savings.
About 9,000 of these jobs are to go at Opel.
However, the agreement announced on Friday will ensure there will be no compulsory job losses at European Opel plants until 2010.
"We have achieved our goal of making the German production sites competitive and fit for the future"
Production of Saab 9.3 models will transfer from Saab's Trollhaettan plant to Ruesselsheim while the latter factory, near Frankfurt, will also build the new Opel Vectra.
Opel's Bochum plant will be responsible for the Astra model and the Zafira van while Kaiserslautern will continue to make components for a range of GM models.
Flexible future
In return for employment guarantees, unions have agreed to a package of labour and efficiency savings at the plants.
GM IN EUROPE
Workers - historically better paid than counterparts at other carmakers - will see their pay frozen in 2004 and 2005 while salary rises will be reduced by 1% between 2006 and 2010.
Flexible working patterns will be introduced, linked to demand, while bonuses will be reduced.
Both management and unions expressed satisfaction at the agreement.
"We have achieved our goal of making the German production sites competitive and fit for the future," said Hans Demant, Opel's chairman.
'Unique agreement'
Klaus Franz, from IG Metall, said the agreement was "unique" in the modern history of the German car industry.
"This contract proves that even in the most severe times of crisis, the German model of worker participation is not only capable of development but can also be used to shape events," he said.
Opel has been a running sore for GM since the late 1990s.
Its market share has declined from 17% to 12% in the face of stiff competition from VW and BMW.
GM emphasised that it was still committed to manufacturing in Sweden despite the fact that the production of midsize Saab vehicles would move to its largest German factory.
Its Swedish operation would produce the new Cadillac BLS as well as selected Saab brands until 2010, GM insisted.
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